UK splits its stablecoin rulebook in two

The @bankofengland and @TheFCA have published their joint oversight plan for sterling stablecoins, drawing a clear line between everyday crypto-market coins and those large enough to pose a risk to UK financial stability.

How the two tiers work

The framework operates on two levels. The Bank and the FCA have designed an integrated two-part regime, with proportionate requirements for both non-systemic and systemic stablecoin issuers. Smaller issuers answer to the FCA alone. Those that HM Treasury formally recognises as systemic face a second layer of Bank of England supervision on top, covering prudential regulation and financial stability requirements.

Coins like ethereum:0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 and solana:Es9vMFrzaCERmJfrF4H2FYD4KCoNkY11McCe8BenwNYB remain under FCA-only supervision for now. The FCA's crypto regulatory framework takes effect on October 25, 2027, covering exchanges, custodians, stablecoin issuers, staking firms, and more. Firms must apply for FCA authorisation between 30 September 2026 and 28 February 2027, and existing anti-money laundering registrations do not automatically transfer.

The systemic threshold matters. The Bank's rules are designed to advance its financial stability objective, reflecting the greater risks that can arise where a stablecoin is widely used as money at scale in everyday retail and corporate payments. No stablecoin has yet been designated systemic by HM Treasury, but the regime is now in draft rule form.

Key details and timelines

The FCA will regulate all qualifying stablecoin issuers who are issuing stablecoins from an establishment in the UK, to protect consumers, promote effective competition, and protect and enhance the integrity of UK markets. Where an issuer is later recognised as systemic, the Bank steps in alongside the FCA rather than replacing it.

One notable concession to industry: the stablecoin capital requirement was reduced from 2% to 1% of issued value after industry pushback. Systemic issuers will also face a temporary £40 billion issuance guardrail, replacing earlier per-holder limits that drew criticism from parliamentarians and industry bodies alike. This guardrail will be reviewed regularly and removed once risks to credit provision have been addressed.

The Bank's consultation on its draft Code of Practice closes 22 September 2026, with final rules expected by end of year. The FCA's feedback window closes 30 September. Sarah Breeden, Deputy Governor for Financial Stability, said the announcement was "a major milestone in delivering greater choice and innovation in UK payments."

Sources:
Bank of England and FCA: Joint Regulation of Systemic Stablecoin Issuers
Bank of England: Policy Statement and Draft Rules on Systemic Stablecoins
Cryptonomist: UK Crypto Regulation FCA Framework and 2027 Deadline